Is the Billable Hour Now Dead?

The billable hour has been criticized by many people in the legal industry, including me. But, from a business development standpoint, I’m not against the billable hour per se as much as I’m in favor of using alternative fees (fixed, blended rates, etc) to increase a law firm’s marketing advantage. That’s not entirely true; I am also against the hourly billing system because clients generally hate it. But I digress.

A story by Leigh Jones that appeared in the New York Lawyer Monday claiming the death of the billable hour (free registration required),may have just given 170-lawyer Ford & Harrison the marketing coup of the year. It has eliminated the associate billable hour requirement for first years in their firm. That will:

Please new associates (and aid recruiting),

Probably make clients happy (for reasons that aren’t spelled out. Certainly the work will have to be picked up by more expensive associates), and

Annoy competitors (for obvious reasons).

However, the jury is still out as to whether other firms will follow, or even if Ford & Harrison will continue the program after trying it for awhile. Although the firm has not discarded the billable hour system, by removing the requirement for first years, they may have allowed the camel’s nose to get under the tent. We’ll see.

I’m not so sure the work will be picked up by more expensive senior associates– the clients just won’t be charged for the learning curve of the first year associates.
The billable hour is a horrible aspect of our glamor profession– it turns us into pieceworkers, and it is a near occasions of sin which encourages the perception that we are cheats and sharks.
Tom’s response: You may be totally correct, Bill. But, while the new associates are climbing the learning curve, and not having to bill 1900 hours, there might just be some slack that will need to be picked up by more senior associates. It should be interesting.

I noticed that the most recent ABA Journal finally picked up on your news about Ford & Harrison abolishing first-year associate billable hour requirements. While I, too, applaud them for this move, I’m not very optimistic that this policy will eventually lead a law firm away from the billable hour economic model. And it may have the consequence of putting more billable hour stress on second-year and more senior associates who may be called upon to make up for the revenue lost by not billing first-years, particularly with first-year BASE compensation at the big firms on the coasts approaching $200,000 per year.
Nonetheless, I think this policy is a noble one and worth repeating at more firms.